Three Peer to Peer Insurance Projects

In general people tend to be quite skeptical about the insurance industry, as many of us had really negative experiences with insurance companies. What if insurance could be social, fair and reasonable? Peer to peer insurance is a brand new approach to insurance that has been growing in the last few years. Peer to peer insurance is focused on lowering the cost of insurance. It resulted from an awareness that if social networks have changed our lives, the benefits of the existing social infrastructure in the insurance market could be a really great alternative for all.

To develop a p2p insurance projet some policyholders will need to club together. If there is a claim then they will work to support one another from a financial perspective. On the other hand, if there is no claim made then insurance premiums may be lowered. The small groups of insurance policyholders are typically created online. The way that it works commonly is that each person pays some money into a shared fund of the group. In addition, monies are paid to the insurer. If there is an incident for a person in the group that might lead to a claim then that person will be paid initially from the group fund. If the claim is beyond that then the insurer may be contacted beyond that. If however no claim is made then the person can get their share back or they can put it towards the policy for next year. The essential requirement to be able to take part is that each group member needs to have the same kind of insurance. There are some interesting peer to peer insurance projects up and running already, which include:

InsPeer

Launched in February 2015 InsPeer considers itself an Insurance 2.0 company. The organisation allows users to share insurance risks with their friends through having friends and family members contribute to deductibles and through providing the same for them too. The way that this is beneficial is that deductibles must be paid out of pocket when there is a claim before the insurer will put its hand in its pocket. This can add up quite quickly. InsPeer allows the user to select the people that he/she will share deductibles with, and in each case the person has to set up a mutual contribution in case a claim has to be made. When a claim is made the insurers are notified and the confirmation letter is uploaded to InsPeer. InsPeer then collects the money from the partners who agreed to the mutual deductibles. The great thing about the InsPeer service is that it is entirely free if no claims are made. If a claim is made then InsPeer will charge a small fee which comes out of the money paid back by the insurer. Currently this service is only available in France.

Friendsurance

Friendsurance offers online peer to peer insurance which is based around social networks and operates in conjunction with insurance companies that are well established. The platform allows customers to connect with one another to be able to create individual insurance networks. The organisation claims that use of Friendsurance can lead to insurance premiums that are 50 per cent lower. The organisation was founded in Berlin in 2010. The way it works is that customers look for an individual insurance coverage from a range of providers that are listed on the Friendsurance platform. They can then connect with one another and send invitations. People can connect regardless of the insurance scheme or provider that they choose. When people connect with one another they make an agreement to support each other with a small amount (up to 30 euros) in the case of a claim. This means that the more connections a person has on the platform the better the support they have in case they need to make a claim. The insurance provider then only covers for issues that are above this amount that the person is able to claim from their contacts.

Guevara

Guevara is a peer to peer insurance project that is focused specifically on car insurance. The way that it works is that people pool their premiums online in order to save money. The difference between this and regular insurance is that if there is money in the pool at the end of the insurance year then that money stays with the group. This offsets and effectively lowers the price of their insurance the next year. When claims are kept low it is estimated that customers can save up to 80 percent of what they paid in the past. Guevara claims that its system is much fairer. People decide for themselves who they will invite into their group, so that they have the power to include drivers that they believe they can trust. People can look for their friends on Guevara or alternatively browse other groups to join. A group needs 10 members to buy a policy, but 20 members to be fully functioning. This is when the protection pool becomes active. Guevara won the WIRED Money 2014 Startup Stage. In the following video, Kim Miller, the company’s CEO explains how Guevara works:

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